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Before the 

FEDERAL COMMUNICATIONS COMMISSION 
Washington, DC 20554 



In the matter of 

Interpretation of the terms 
"Multichannel Video Programming 
Distributor" and "Channel" as Raised 
in Pending Program Access 
Complaint Proceeding 



MB Docket No. 12-83 



COMMENTS OF PUBLIC KNOWLEDGE 



John Bergmayer 
Senior Staff Attorney 

PubUc Knowledge 
1818 N St. NW 

Suite 410 

Washington DC, 20036 
May 14, 2012 



TABLE OF CONTENTS 



Introduction and Summary 1 

I. The Term "Multichannel Video Programming Distributor" Encompasses 
All Platforms That Make Available Prescheduled "Video Programming" ... 2 

A. Principles of Statutory Construction Demand That The Commission Take 
Account of Context When Interpreting a Statute 2 

B. Other Provisions of the Law, Commission Practice, and Common Usage All 
Demonstrate That the Term "Channel" Has Both a "Container" and a 
"Contents" Sense 4 

C. The 1992 Cable Act Uses "Channel" To Mean "Prescheduled Video 
Programming" 8 

D. The Legislative History of the 1992 Cable Act Confirms That "MVPD" Is a 
Technology-Neutral Category 12 

E. A Narrow Reading of "Channel" Would Have Unintended Consequences... 15 

F. Many Policy Benefits Would Follow From the Bureau's Clarification That 
Online Services Can Choose to Compete as MVPDs 17 

1. Consumers Would Benefit 1 7 

2. Independent Programmers Would Benefit. 1 7 

3. All Online Video Distributors Would Benefit, Even Ones That Are Not 
MVPDs 18 

4. Device Makers and Their Customers Would Benefit 19 

5. Competitive MVPDs Would Benefit 2 1 

G. The Majority of Current Online Video Services Are Not, and Could Not 
Become, MVPDs Unless They Chose To 21 

II. The Commission Has Discretion to Interpret the Law to Enhance 
Competition 22 

A. The Commission Should Resolve Any Statutory Ambiguity in Favor of 
Competition 22 

B. The Commission Can Use Its Ancillary Authority to Promote Video 
Distribution Competition 23 

III. The Commission Should Update Its Policy Framework for Online and On 
Demand Video 24 

A. Section 628 Prohibits Anti-Competitive Actions By an MVPD Against Any 
Video Distributor 24 

B. The Commission Should Consider the Policy ImpHcations of the Increasing 
Popularity of On Demand Video 25 

CONCLUSION 26 



ii 



INTRODUCTION AND SUMMARY 

The Commission should clarify that online video providers such as Sky Angel are 
"multichannel video programming distributors" (MVPDs). Only a technology-neutral 
reading of the term is consistent with the text and purpose of the Communications 
Act.i This action will not redefine all online video platforms as MVPDs. Nor will it 
define any online video system as a cable system.^ Rather, only those IVlVPDs that 
closely emulate traditional, channel-based MVPDs will be affected. To implement 
this, the Commission will have to slightly modify a few of its regulations. But this 
reading is consistent with the technologically-neutral approach Congress has taken 
to video competition since the Cable Television Consumer Protection and 
Competition Act of 1992, and as such, no statute stands in the way of this pro- 
consumer, pro-competitive understanding of the law. 

Additionally, the Commission should find that Section 628 of the 
Communications Act prohibits anti-competitive actions by any MVPD against any 
video programming distributor, multichannel or not. There is no sound policy 
reason for the Commission to prohibit anti-competitive actions by one MVPD 
against another MVPD, but not by an MVPD against a non-MVPD video programming 
distributor. 

Finally, the Commission should issue a further notice of inquiry in this docket 
that seeks comment on a comprehensive policy framework for non-multichannel 

1 For example, the Commission is charged with promoting an "efficient" 
communications system. 47 U.S.C. § 151. The goal of "efficiency" would not be well- 
served if the Bureau makes distinctions between like systems based only on 
irrelevant technical implementation details. 

2 For Communications Act purposes. Whether a system is a "cable system" for 
copyright purposes is another matter. See 17 USC § 111. 

1 



video. While on-demand content is "video programming" under the Act, it is not 
channel-based. But it is clear that the market is moving increasingly toward on- 
demand video, and the Commission should seek to understand the competitive 
effects that this transition may cause. 

I. The Term "Multichannel Video Programming Distributor" Encompasses All 
Platforms That Make Available Prescheduled "Video Programming" 

Any provider that makes available multiple channels of video programming is a 

"multichannel video programming distributor" ("MVPD"]. While distributors like 

Sky Angel indisputably offer "video programming," the Bureau has asked whether 

online services offer "channels" of video programming. As used in the Cable 

Television Consumer Protection and Competition Act of 1992, a "channel" is a 

stream of signal of prescheduled video programming. Since an online distributor 

like Sky Angel offers "channels" in this sense just as DirectTV or Time Warner Cable 

do, such distributors meet the definition of MVPD. 

A. Principles of Statutory Construction Demand That The Commission Take 
Account of Context When Interpreting a Statute 

The word "channel" is used in different ways in the Communications Act. In a 
video context, the Act uses the term both in a "container" sense, to refer to a range of 
frequencies used to transmit programming, and in a "content" sense to refer to the 
programming itself, or the programmer. This figure of speech is known as 
synecdoche, and it pervades the language. "When we say 'the kettle is boiling' we do 
not mean that the metal container (the kettle) has become a lump of molten metal; 



2 



we mean that the contents of the kettle (the water in it) has boiled."^ Thus when the 

term is used in the Act it is necessary to read the word in either the "container" 

sense, or in the "contents" sense, as context demands. 

There is nothing unusual about reading a statutory term different ways in 

different contexts. While there is an interpretive presumption that a term that 

appears several times in a statute is given the same reading each time,^ the Supreme 

Court has explained that this presumption "readily yields" and that "[i]t is not 

unusual for the same word to be used with different meanings in the same act, and 

there is no rule of statutory construction which precludes the courts from giving to 

the word the meaning which the legislature intended it should have in each 

instance."^ As the Court further explained. 

Where the subject matter to which the words refer is not the same in the 
several places where they are used, or the conditions are different, or the 
scope of the legislative power exercised in one case is broader than that 
exercised in another, the meaning well may vary to meet the purposes of the 
law, to be arrived at by a consideration of the language in which those 
purposes are expressed, and of the circumstances under which the language 
was employed.^ 

Commission practice confirms that the same word can be given a different 
construction when it is used by different acts. For example, the Commission 
interprets the word "telecommunications" to mean one thing under the 
Telecommunications Act, and another thing under the Communications Assistance 



3 Christopher Kelen, An Introduction to Rhetorical Terms 28 (Humanities-Ebooks 
2007). 

^Ratzlafv. United States, 510 U.S. 135, 143 (1994) 

5 Atlantic Cleaners & Dyers, v. United States, 286 US 427, 433-34 (1932) 

6 Mat 433. 



3 



for Law Enforcement ActJ As the DC Circuit recognized, it is well within the 

Commission's authority to give words different constructions from one act to 

another when the different laws evince "different texts, structures, legislative 

histories, and purposes."^ Similarly, the word "channel" means one thing when used 

as part of the Cable Communications Act of 1984^ ("1984 Cable Act") and another 

thing when used as part of the definition of multichannel video programming 

distributor ("MVPD") in the Cable Television Consumer Protection and Competition 

Act of 199210 ("1992 Cable Act"). In particular, the word "channel" in the 1992 Cable 

Act should be given a "content" reading, since only that reading is consistent with 

the Act's pro-competitive purposes. 

B. Other Provisions of the Law, Commission Practice, and Common Usage All 
Demonstrate That the Term "Channel" Has Both a "Container" and a 
"Contents" Sense 

According to the 1984 Cable Act, "the term 'cable channel' or 'channel' means a 
portion of the electromagnetic frequency spectrum which is used in a cable system 
and which is capable of delivering a television channel (as television channel is 
defined by the Commission by regulation)." In the Sky Angel Standstill DeniaP^ the 
Bureau used this definition to find that Sky Angel is not a "multichannel video 
programming distributor" (MVPD), since an MVPD "makes available for 
purchase...multiple channels of video programming."!^ The Bureau reasoned that 

^ See American Council on Educ. v. FCC, 451 F. 3d 226, 230 (DC Cir. 2006). 

8 Mat 231. 

9 PL 98-549, 98 Stat. 2779 (1984). 

10 PL 102-385, 106 Stat. 1460 (1992). 

11 Sky Angel Emergency Petition for Temporary Standstill, Order, 25 FCC Red. 3879 
(MB 2010). 

1247 use §522(13). 



4 



Sky Angel does not make available for purchase any "channels" since the 
electromagnetic frequency spectrum that its video programming uses for 
transmission is provided by a viewer's broadband ISP and not by Sky Angel.^^ 

This construction's primary flaw is that it ignores the relevant context. The term 
"MVPD" was adopted as part of the 1992 Cable Act, not the 1984 Cable Act. As will 
be discussed below, the 1992 Cable Act was concerned with promoting inter- 
platform competition and (contrary to the Bureau's conclusion) not all of systems 
listed in the statute as illustrative of MVPDs provide a transmission path. But it is 
important to note that even the 1984 Cable Act's definition uses both senses of the 
term "channel" (the container sense and the contents sense) when it speaks of one 
kind of channel carrying another kind of channel. This demonstrates that the 
drafters of the 1984 Cable Act saw a channel as both a medium of communication 
(in this case, the frequency which a communication may use) and the content of a 
communication itself (a television station, or television channel). Otherwise, the 
statute would be incoherent. Used only in the "container" sense, one channel cannot 
"deliver" another. A channel can be used to retransmit content, but one portion of 
the electromagnetic frequency spectrum cannot be used to "deliver" another portion 
of the electromagnetic frequency spectrum. A channel can only deliver 
programming. Thus the 1984 Cable Act's definition of "channel" itself uses the term 
"channel" in both the "delivery" sense and the "content" sense. 

The Commission frequently uses the term in both senses, as well. For example, in 
its recent NPRM on revision of the program access rules, it wrote that "consumers 

13 Sky Angel Standstill Denial at If 4. 

5 



do not consider the SD version of a particular channel to be an adequate substitute 
for the HD version.''^^ word "channel" in this context makes no sense if it means 
"a portion of the electromagnetic frequency spectrum." There is no "HD" or "SD" 
version of a particular frequency band; rather, particular frequency bands can carry 
content that is in either HD or SD. Similarly the Commission, in discussing the 
Comcast Network, wrote that "this terrestrially delivered, Comcast-affiliated local 
news and information channel is available only to Comcast and Cablevision 
subscribers and is withheld from competitors to incumbent cable operators."!^ Here 
again the Commission uses the term to refer to content and not to a frequency band. 
And in its Comcast/NBCU conditions order, while the Commission declined to 
resolve whether an online video distributor (OVD) could be an MVPD,i^ it discussed 
how "the fact that most OVD services do not currently offer consumers all popular 
linear channels does not mean that they cannot and will not do so in the near 
future."!^ Thus the Commission has already acknowledged that no technical barrier 
stands in the way of online services providing "channels" of programming to their 
customers. Generally speaking it is clear from context whether the Commission (or 
Congress) is using "channel" in a content or a container sense, and in those cases 



14 Revision of the Commission's Program Access Rules, Notice of Proposed 
Rulemaking, MB Docket No. 12-68, FCC 12-30 (Mar. 20, 2012) at U 54. See also 
Program Access Rules & Examination of Programming Tying Arrangements, First 
Report & Order, 25 FCC Red. 746, T[ 55 (2010). 

15 Program Access Rules & Examination of Programming Tying Arrangements, First 
Report & Order, 25 FCC Red. 746, If 30 (2010). 

1^ Applications of Comcast Corp., GE Co. & NBC Universal, Inc., Memorandum Opinion 
& Order, 26 FCC Red. 4238 (2011) at Tf 61 n.l31. 
17 Id. If 80. 



6 



where there may be ambiguity, qualifying words (such as "channel capacity^^) 
provide the necessary disambiguation. In the case of the definition of MVPD in the 
1992 Cable Act, as will be discussed below, it is clear from the context and purpose 
of the law that a "channel" is intended to be given a service-based, not a technology- 
based reading. 

Two popular reference works will conclude the demonstration that the word 
"channel" in a television context frequently is used in two different senses. First, the 
Oxford English Dictionary defines channel as "[a] band of frequencies of sufficient 
width for the transmission of a radio or television signal; spec, a television service 
using such a band," providing both senses of the word.^^ Second, Wikipedia, with an 
ethos very different from the OED, similarly provides both senses. It writes that "[i]n 
broadcasting, a channel is a range of frequencies (or, equivalently, wavelengths) 
assigned by a government for the operation of a particular radio station, television 
station or television channel," providing the "container" sense of the word. But it 
concludes with the content sense, explaining that "[i]n common usage, the term also 
may be used to refer to the station operating on a particular frequency."^'' 

While the different ways that the 1984 Cable Act, the Commission, or anyone or 

anything else uses the term does not determine how the 1992 Cable Act uses the 

term, it is instructive to observe these different senses since they illustrate the 

1^ See Internet Ventures Petition for Declaratory Ruling that Internet Service 
Providers are Entitled to Leased Access to Cable Facilities, Memorandum Opinion & 
Order, 15 FCC Red. 3247 (2000). 

19 Oxford English Dictionary Online Edition, http://www.oed.com (accessed May 2, 
2012). 

2" Channel (broadcasting), 

http://en.wikipedia.0rg/w/index.php7ti tle=Channel_(broadcasting)&oldid=442911 
630 (last visited May 2, 2012; last edited Aug. 3, 2011). 

7 



different meanings the word can have in different contexts. In sections below it will 

be shown how the word "channel" when read in the context of the 1992 Cable Act 

must be given a "content" reading, both to make sense of the statutory context and 

to give effect to Congress's pro-competitive intent. 

C. The 1992 Cable Act Uses "Channel" To Mean "Prescheduled Video 
Programming " 

The 1992 Cable Act gives the following definition of "multichannel video 

programming distributor": 

the term "multichannel video programming distributor" means a person such 
as, but not limited to, a cable operator, a multichannel multipoint distribution 
service, a direct broadcast satellite service, or a television receive-only 
satellite program distributor, who makes available for purchase, by 
subscribers or customers, multiple channels of video programming[.]2i 

A plain reading of this definition demonstrates that MVPDs are characterized by 
what they do, not how they do it. All providers who "make[] available for purchase, 
by subscribers or customers, multiple channels of video programming" qualify. As 
the FCC has previously found, the plain language of this definition does not require 
that an MVPD "operate [its] vehicle for distribution."^^ Indeed, in the 
Telecommunications Act of 1996 Congress demonstrated that an MVPD need not be 
facilities-based when it mentioned that an MVPD might "use the facilities" of another 
provider.23 This shows that the last time it considered this issue, and consistent with 
the 1992 Cable Act, Congress found that "MVPD" was a service-oriented category 



2147 U.S.C.§ 522(13). 

22 Implementation of Section 302 of the Telecommunications Act of 1996, Open 
Video Systems, Third Report & Order & Second Order on Reconsideration, 11 FCC Red. 
20227,11 171 (1996). 

23 47 U.S.C. § 543(1)(1)(D) (discussing a "multichannel video programming 
distributor using the facilities of [a] carrier or its affiliate"). 



8 



and not a technological silo. The law does not require that an MVPD build or operate 
last-mile wired facilities, launch a satellite, or use any particular technology or 
method of program delivery. 

To further clarify this. Congress provided in its definition a list of every then- 
existing multichannel service ("a cable operator, a multichannel multipoint 
distribution service, a direct broadcast satellite service, or a television receive-only 
satellite program distributor") while expressly reserving that the list was not 
intended to be exhaustive ("a person such as, but not limited to."] This demonstrates 
that Congress intended the definition to encompass technologies that, at the time, 
had not yet been developed. 

In its Sky Angel Standstill Denial the Bureau took note of this but reasoned that, 
because the definition states that an MVPD must be a system "such as" the ones 
expressly listed, to be an MVPD a system must share characteristics with the ones 
given.24 Of course, any MVPD must, like the listed MVPDs and consistent with the 
definition, provide multiple channels of video programming to subscribers. This 
provides the necessary commonality between the listed services. But the Bureau 
further reasoned that each listed MVPD provides a "transmission path" it uses to 
deliver video programming.^^ (This reasoning informed its narrow construction of 
"channel," discussed below.] In addition to contradicting FCC precedent, this 
analysis if flawed for at least three reasons. 

First, while it may be that a cable system or a telco MVPD "provides" a 
transmission path in the sense that they physically string copper wires or fiber optic 

24 Sky Angel Standstill Denial at Tf 7 n.41. 

25 Id. at If 7. 

9 



cable, wireless systems like DBS and MMDS do not similarly "provide" a 
transmission paths. They use licensed spectrum to transmit information like any 
other wireless services. They did not build this spectrum and do not "provide" it. 

Second, even if the Bureau decides that wireless systems do "provide" (or "make 
available"] a transmission path, it is not clear that online systems do not provide 
transmission paths in the same way. For example, an online video distributor might 
enter into a relationship whereby it leases and resells last-mile broadband 
capacity.26 And even a traditional cable system does not necessarily provide a 
complete transmission path to a viewer's television: the viewer herself or a landlord 
might provide inside wiring, for instance. Given this background, since online 
services generally own or lease some facilities (such as servers) and "transmit" 
programming partly on their own Internet connections, they "provide" transmission 
paths in the same sense as other MVPDs. 

Third, it is the wrong question. Nothing in the text or legislative history of the 
Act suggests that Congress intended to hide an unstated requirement that MVPDs 
must be facilities-based. Thus analyzing whether or not particular video platform is 
or is not facilities-based and whether or not it provides a transmission path is an 
unnecessary diversion. It is clear from context that as part of the definition of MVPD 
"channel" should be given a "contents" reading. Questions about the nature of the 
facilities an MVPD uses are thus inapposite. Consumers do not purchase "a portion 

26 See Implementation of Section 302 of the Telecommunications Act of 1996, Open 

Video Systems, Third Report & Order & Second Order on Reconsideration, 11 FCC Red. 
20227, Tf 171 (1996). Furthermore, it is well-estabUshed that a "facilities-based" 
provider may be a reseller. 5ee, e.g., Flying J Petition for Expedited Declaratory 
Ruling, Memorandum Opinion & Order, 18 FCC Red. 10311 (2003). 



10 



of the electromagnetic spectrum" when they subscribe to an MVPD. They buy access 
to content — in particular, to channels like NBC, ESPN, and Comedy Central. An 
MVPD like Comcast even distinguishes its various TV plans as offering different 
levels of "on demand" and access to different numbers of "channels."^^ The channels 
in question are given names like "MTV" and "Discovery," not like "549.25 MHz." This 
demonstrates that what matters to everyone concerned is the content, not the 
precise carrier. 

This practice is consistent with the statute, which makes clear that consumers 
buy access to "video programming" in two primary ways: on-demand, and via 
prescheduled channels. The law distinguishes these two services when it provides 
that 

the term 'interactive on-demand services' means a service providing video 
programming to subscribers over switched networks on an on-demand, 
point-to-point basis, but does not include services providing video 
programming prescheduled by the programming provider[.]2^ 

On-demand and prescheduled programming thus represent different models of 
presenting "video programming." By defining a kind of service ("interactive on- 
demand service") that is distinct from MVPDs, and by providing that video common 
carriers that offer only interactive on-demand services would not be considered 
"cable systems" (one kind of MVPD) Congress drew a line between providers of 
prescheduled video programming on the one hand, and providers of on-demand 
video programming on the other. Since on-demand video programmers are not 

27 See, for example, Comcast's overview at 

http://comcast.com/Corporate/Learn/DigitalCable/digitalcable.html (last accessed 
May 10, 2012). 

28 47 U.S.C.§ 522(12). 

29 47 U.S.C.§522(7)(C). 

11 



cable systems and are therefore not MVPDs, it follows that a provider of 

prescheduled video programming is an MVPD. Thus, for the purposes of the 1992 

Cable Act, a "channel" of video programming must simply mean "prescheduled video 

programming," or a provider of such programming.^"^ 

"Channels" and "on-demand" are both services, not technological delivery 

methods. The overall statutory scheme would fail if a "channel" were found to be a 

transmission method while "on-demand" remained a service. As will be discussed 

more fully below, under this reading, there is no reason why an on-demand service 

could not be delivered via a channel. Only a reading that understands that both of 

these terms refer to mutually exclusive services prevents such commingling. 

D. The Legislative History of the 1 992 Cable Act Confirms That "MVPD" Is a 
Technology-Neutral Category 

The 1984 Cable Act was "was premised on the expectation that emerging 
competition in the video marketplace would result in reasonable rates for cable 
service and improved customer services practices."^! However, after its passage 
"competition to cable from alternative multichannel video technologies largely ... 
failed to materialize."^^ Business and regulatory barriers stood in the way of 
competition, and consumers suffered. 



While an MVPD becomes one by virtue of delivering channels of video 
programming, video programming it offers via any means [including on demand) 
may be subject to special requirements. For example, video programming offered 
on-demand by an MVPD is subject to program access rules while on-demand 
programming offered by a non-MVPD would not be. See Applications of Comcast 
Corp., GE Co. & NBC Universal, Inc., Memorandum Opinion & Order, 26 FCC Red. 4238 
(2011) atlI54n.l22. 

31 H.R. Rep. No. 102-628 (1992) at 26. 

32 W. 



12 



In response, Congress enacted the 1992 Cable Act. In that Act, rather than 
simply regulating monopolist cable systems. Congress enacted a series of measures 
designed to promote consumer welfare by enabling competition to cable from 
systems that used different transmission methods. Rather than regulating each 
different system differently according to its technology, Congress created a new 
service category, "multichannel video programming distributors" (MVPDs), along 
with a framework that treated all MVPDs alike. Thus, the program access and 
retransmission consent systems that were central components of the 1992 Cable 
Act apply to all MVPDs, not just to cable or just to satellite TV. Of course, where 
there are good reasons to treat different classes of MVPDs differently Congress 
continues to do so. But the future-proof laws that concern MVPDs generally were 
specifically designed to be technology-neutral and can apply to online MVPDs today 
just as, in 1992, they easily encompassed cable, direct broadcast satellite, and 
multichannel multipoint systems. 

A "principal goal" of the 1992 Cable Act was "to encourage competition from 
alternative and new technologies,"^^ by extending like treatment (e.g., under the 
program access rules, and for retransmission consent purposes] to like services.^^ 
This would enable competition rather than regulation to protect consumers. The 
House found that "competition ultimately will provide the best safeguard for 
consumers in the video marketplace and strongly prefers competition and the 



33 Mat 27. 

34 1992 Cable Act, PL 102-385, 106 Stat. 1460 at 1482 (retransmission consent 
appUes to all multichannel video program distributors), 1494 (some MVPDs are 
prohibited from taking anti-competitive actions against any MVPD). 



13 



development of a competitive marketplace to regulation/'^s (it also found that "until 
true competition develops, some tough yet fair and flexible regulatory measures are 
needed."^^] Along these lines, the Senate found that "[ejffective competition is 
achieved when there is competition from both another 'multichannel provider' 
(such as a competing cable operator, microwave or satellite system) and a sufficient 
number of over-the-air broadcast signals"^'' — thus recognizing the need for broad, 
multi-platform competition between video providers without regard to their 
specific modes of operation. 

The fact that online MVPDs were not yet possible when Congress passed the 
1992 Cable Act is of no importance. To be sure. Congress enacted the 1992 Cable Act 
in response to conditions that were prevalent in 1992.^^ But in defining MVPDs it 
used broad language, and "[t]he use of broad language ... to solve [a] relatively 
specific problem ... militates strongly in favor of giving [a statute] broad 
application."^^ in any event the problem that it sought to solve — consumer harms 
caused by a lack of sufficient competition — persists today. And the solution is the 
same: a service-oriented approach to the video market that permits MVPDs using 
any technology to compete with established cable systems. 



35 H.R. Rep. No. 102-628 (1992) at 30. 

37 S. Rep. No. 102-92 (1992) at 63. 

38 The legislative history's reference to "facilities-based" competition should be read 
in this light. See H.R. Rep. No. 102-862 at 993 (1992). In 1992 the main competition 

to cable that could be foreseen was facilities-based. However, given the broad 
language of the Act, the pro-competitive policies that Congress enacted should not 
be confined to particular kinds of technology. 

39 Consumer Electronics Ass'n v. FCC, 347 F. 3d 291 (D.C. Cir 2003). 



14 



Given the pro-competitive, technology-agnostic approach evinced in the statute 
and the legislative history it is clear that Congress intended "MVPD" to be a service 
category, not a technological silo. If it intended to require that MVPDs be facilities- 
based it could have easily said so in the statute. It is unlikely that it would have 
enacted such a requirement through the circuitous means of incorporating in its 
definition one of the possible senses (the "container" sense) of the word "channel."^" 
Thus, the Bureau should revise the construction of "channel" as contained in the 
definition of MVPD that it adopted in the Sky Angel Standstill Denial to reflect 
Congress's technology-neutral intent. 

E. A Narrow Reading of "Channel" Would Have Unintended Consequences 
Unless the Bureau revises the restrictive definition of "channel" it adopted in the 
Sky Angel Standstill Denial, numerous unintended consequences will follow. These 
go beyond the anti-competitive and anti-consumer effects that would be expected to 
follow from artificially restricting market entry. Instead the Bureau may find that 
many "channels" that are currently offered by MVPDs are not channels at all 
anymore — or it may find that other services offered by MVPDs, such as interactive 
apps or on-demand programming are suddenly defined as "channels," based only on 
the behind-the-scenes technical characteristics of the way that the content is 
delivered. 

For example, if the Bureau continues to hold that an MVPD must provide its 
subscribers with a transmission path, then any programming that is delivered 
without a fixed transmission path may become ineligible. IP-based MVPDs such as 

40 See Whitman v. American Trucking Association, 531 U.S. 457, 468 (2001). 



15 



U-Verse that may not assign particular programming networks particular 
frequencies may not provide any "channels" at all if "channel" is defined in this way. 
Switched digital networks on cable systems may no longer count as "channels" since 
they are not continually broadcast on a fixed "portion of the electromagnetic 
frequency spectrum." And any MVPD would simply be able to spin off its facilities 
into a separate affiliate and then lease them back in order to avoid MVPD regulation. 
At the same time, if an MVPD provides its video-on-demand or other services on 
particular bands of frequencies, then these services would be considered "channels" 
under the Commission's rules. There is nothing in the definition of "channel" as 
adopted by the Sky Angel Standstill Denial that would exclude on-demand 
services. As was mentioned above, because "on-demand" is a kind of service, if 
"channel" refers to a means of delivery then on-demand video programming could 
very well be delivered via a "channel." By contrast, a service-based reading of 
"channel" precludes this. For the purposes of defining an MVPD, only a service- 
based reading of the term "channel" that refers to a prescheduled transmission of 
video programming is sufficient to both 1) ensure that traditional "channels" 
continue to be considered "channels" under the Commission's rules, and 2) ensure 
that only traditional channels are considered "channels" under the Commission's 
rules. 

Needless to say such shifting categories would wreak havoc with the 
Commission's ability to oversee the MVPD market — existing programming may fall 
outside the program access rules while other services come within them, and 
MVPDs would have an incentive to engineer their systems inefficiently just to 



16 



qualify for, or fall outside of, particular rules. The Commission has seen ample 
evidence of exactly this kind of behavior — MVPDs have continually tried to skate 
around FCC and Congressional policy by delivering programming via terrestrial 
wires instead of satellite, providing only the standard definition and not the high 
definition versions of feeds to competitors, and so forth. It does not require much 
imagination to see how a cable system might stop providing some programming to a 
DBS competitor by claiming that this programming no longer counted as a "channel" 
under the Commission's rules since it is not offered over an assigned transmission 
path. 

F. Many Policy Benefits Would Follow From the Bureau's Clarification That 
Online Services Can Choose to Compete as MVPDs 

1. Consumers Would Benefit 

By clarifying that an online system can qualify as an MVPD, the Bureau will 
significantly benefit consumers. A t5^ical viewer will go from having a choice of one 
or two MVPDs to any number of them. Just as a reader today is no longer limited to 
the local newspaper and one or two national papers, but can read onUne news from 
around the country and around the world, by clarifying that online systems can 
qualify as MVPDs, the Bureau will make it so that viewers can choose from between 
a large number of competitive MVPDs instead of being limited to the same few 
options, year after year. 

2. Independent Programmers Would Benefit 

Independent programmers will benefit, as well. Today an independent 
programmer has no choice but to deal with a handful of large programming 
distributors, on terms the distributors set. While the program access rules prevent 



17 



an MVPD from keeping a programmer from being carried by other current MVPDs, 

nothing at the moment prevents a company Uke Comcast demanding, as a condition 

for being carried on Comcast, that the programmer stay off of onhne platforms. With 

its clarification the Commission will fix that by extending the same protection that 

programmers enjoy with respect to current competitive MVPDs to online MVPDs. 

This will ensure that programmers can bid distributors against each other, extract 

more favorable terms, and extend the reach of their programs. 

3. All Online Video Distributors Would Benefit, Even Ones That Are Not 
MVPDs 

Non-MVPD online programmers will benefit from the FCC's clarification, as well. 
Many online video platforms like Netflix and Vimeo have chosen business models 
that take them outside the meaning of "MVPD." These new models of video 
distribution have been a boon to both viewers and content creators, but they are not 
full substitutes for traditional MVPD service. They usually lack "must-see" 
programming such as current TV shows, live sports, and popular cable networks. 
While many viewers have "cut the cord" (cancelled their MVPD subscription) and 
replicated much of what they might have watched through free over-the-air 
broadcast TV and mixing and matching online services, this is generally an 
imperfect substitute that does not offer all of the programming available through a 
traditional MVPD — and is technologically complex (and somewhat cumbersome) 
besides. But if more viewers were able to access all of the programming they 
currently access through a traditional MVPD subscription online, more consumers 
might be able to switch completely to competitive offerings. For example, a given 
viewer might not have an Amazon Instant Video subscription today, since she finds 

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cable programming indispensable and, on-balance, finds that cable on-demand 
video is good enough to not justify subscribing to an online service. But if onUne 
MVPDs were allowed to thrive consumers might be able to efficiently mix and match, 
obtaining on-demand video from one source and traditional network and cable 
channels from another source. So if a viewer were able to subscribe to an online 
MVPD and access the indispensable programming that currently keeps her tied to 
cable, she might find that Amazon Instant Video serves well as the on-demand 
component of her viewing. Online MVPDs would therefore benefit non-MVPD video 
distributors by allowing viewers to fill in the gaps and obtain the programming that 
the non-MVPDs cannot or do not provide, which makes viewers more likely to 
switch to competitive online offerings. 

Additionally, it is likely that in a world with online MVPDs, non-MVPD online 
video program distributors might be able to access programming they are currently 
shut out from. Currently, facilities-based MVPDs seek out and obtain some measure 
of exclusivity, which can limit online distribution. But if online MVPDs had the same 
access to programming as facilities-based MVPDs then that exclusivity would be 
impossible. There would thus be no reason for an MVPD to keep programming off of 
non-MVPD platforms such as iTunes or Netflix. 

4. Device Makers and Their Customers Would Benefit 

A rise in the number of cord-cutters would also benefit companies that make 
devices and services that facilitate online viewing, such as Boxee, Roku, Hauppage, 
and many others. Today a viewer might not be willing to invest in a device that 
makes online video as easy or easier to watch than traditional MVPD video, since it 



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would be an additional box, taking up space next to a cable set-top box and being yet 
another gizmo to set up, configure, and maintain. But if a viewer could use such a 
device to watch every kind of content it is more likely that they would be willing to 
cut the cord and invest in such a device. This would have a number of positive 
effects. 

Currently MVPD viewers are, for the most part, stuck using MVPD-provided 
devices to navigate and watch TV. Compared with the competitive markets in 
smartphones, tablets, computers, and other areas of consumer electronics these 
devices have bad user interfaces, few features, and are generally poor. This is simply 
because a lack of competitive pressure eliminates the incentive for the companies 
that provide these devices to innovate. MVPDs buy these devices from 
manufacturers, not consumers, so the devices tend to reflect the MVPD priority to 
keep consumers watching MVPD and not online content, and not the viewer priority 
to have an intuitive, useful device. The consumers who are stuck using these boxes 
have no alternatives; they cannot simply go to the store and buy a better one. The 
competitive marketplace for devices that would arise in the wake of the FCC's 
decision to allow online MVPDs to play by the same rules as other MVPDs would 
improve this situation, allowing devices like the Roku and the Apple TV (which are 
already superior to cable set-top boxes] to begin providing all, not just some, of a 
viewers content. The increase utility of these devices would attract yet more 
companies to the market,^i and would in turn encourage cord-cutting, which would 

41 Sony, Apple, and Intel have all been reported as being interested in entering the 
online MVPD market. See Yukari Iwatani Kane & Ethan Smith, Apple Sees New Money 
in Old Media, Wall Street Journal, 

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encourage new online video platforms. These virtuous cycles would benefit viewers 

and significantly improve video competition generally. 

5. Competitive MVPDs Would Benefit 

Finally, online MVPDs would also benefit current, facilities-based MVPDs in a 

number of ways. Currently, many MVPDs pay high rates for retransmission consent. 

But if an MVPD's customers were able to access broadcast content from other 

sources, the MVPD might simply decline to carry expensive broadcast signals, saving 

significantly without inconveniencing its customers (or offsetting that 

inconvenience with lower rates). Additionally, a more fluid MVPD market would 

allow current MVPDs to become online MVPDs as well, competing outside of their 

traditional service areas. 

G. The Majority of Current Online Video Services Are Not, and Could Not 
Become, MVPDs Unless They Chose To 

Although this should be evident from the above, it bears emphasizing that by 
clarifying that a "channel" can be provided online, the Bureau would not somehow 
transform current services like Hulu, Netflix, and iTunes into MVPDs. While they 
provide "video programming" within the meaning of the law, these services do not 
offer channels of programming — their content is typically available on demand. If 
the Bureau acts consistently with these comments their regulatory status would not 
change. 

http://online.wsj.com/article/SB100014240527487034057045750153626536442 
60.html (Jan. 22, 2010] (Apple]; Marguerite Reardon, Is Intel Developing an Online 
TV Service?, CNet, http://news.cnet.com/8301-30686_3-57395834-266/is-intel- 
developing-an-online-tv-service/ (Mar. 12, 2012) (Intel); Andrew Wallenstein, Sony 
Virtual MSO Play Could Hinge on Comcast, Variety, 

http://www.variety.com/article/VR1118053341 (Apr. 30, 2012) (Sony). 



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However, the Bureau's action would allow any service that chooses to operate as 
an MVPD to do so. Any service that begins to offer video programming via multiple 
channels online would be able to benefit from the retransmission consent and 
program access regimes, and would, like any other IVIVPD, be subject to public 
interest obligations.''^^ By adopting a proper reading of "MVPD" that includes online 
services the Commission will both promote new entry and competition without 
extending regulations to any services that do not wish to operate as MVPDs. 
II. The Commission Has Discretion to Interpret the Law to Enhance Competition 

A. The Commission Should Resolve Any Statutory Ambiguity in Favor of 
Competition 

The terms "channel" and "multichannel video programming distributor" are not 
ambiguous. As discussed above, in the context of the 1992 Cable Act "channel" 
unambiguously refers to a stream of prescheduled video programming, and a 
multichannel video programming distributor is any provider who provides this 
service, such as a cable system, DBS, or an online provider such as Sky Angel. 

However, if the Commission finds the statute and the legislative history 
insufficient to demonstrate whether an online video service can be defined as an 
MVPD, the Commission has the authority to make that clarification. Under the 
Commission's Chevron deference it has the authority to interpret the relevant terms 

42 To be sure a proper reading of "MVPD" or "channel" is not the end of the legal 
work that the Commission will have to do to accommodate online MVPDs — the 
Commission may have to update some of its MVPD-wide rules, such as CableCARD 
support, 47 C.F.R. §§ 76.1200-76.1210, and certain technical requirements, e.g. 47 
C.F.R. § 76.610, to better ensure that Congressional intent is carried out with respect 
to this new technology. But such ministerial fixes are well within the Commission's 
authority and are a necessary part of carrying out the pro-competitive goals of the 
1992 Cable Act. 



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and find that online services can be treated as MVPDs. Congress delegated power to 

the Commission to adopt the interpretation of ambiguous language that best 

furthers the public interest goals of the Communications Act. As the Supreme Court 

explained, "[i]f Congress has explicitly left a gap for the agency to fill, there is an 

express delegation of authority to the agency to elucidate a specific provision of the 

statute by regulation. Such legislative regulations are given controlling weight 

unless they are arbitrary, capricious, or manifestly contrary to the statute. 

Sometimes the legislative delegation to an agency on a particular question is implicit 

rather than explicit.'"'^^ Here, if the Commission finds that the operative definitions 

do not definitively answer whether online systems that offer channels of 

programming are MVPDs, it should use its implicit delegation of authority to clarify 

the terms in a way that gives effect to Congress's pro-competitive intent. 

B. The Commission Can Use Its Ancillary Authority to Promote Video 
Distribution Competition 

Furthermore, even if the Commission adopts a reading of statutory language that 
puts online services outside of the definition of "MVPD," it still has ancillary 
authority to determine that online services will be treated as //they were MVPDs. 
Congress expressly gave the Commission power "to perform any and all acts, make 
such rules and regulations, and issue such orders, not inconsistent with this Act, as 
may be necessary in the execution of its functions."^^ There are two conditions for 
ancillary jurisdiction and both are satisfied here.^^ First, the Commission's general 

43 Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 843-44 (1984). 

44 47 U.S.C. § 154(i). See United States v. Southwestern Cable Co., 392 U.S. 157 [1968). 

45 See Comcast Corp. v. FCC, 600 F.3d 642, 646 (D.C. Cir 2010); American Library 
Ass'n V. FCC, 406 F.3d 889, 691-92 (D.C. Cir. 2005). 



23 



jurisdictional grant under Title I covers all "communication by wire or radio,"^^ 

which includes online delivery of video programming, and (2) the regulations are 

reasonably ancillary to the Commission's effective performance of its statutorily 

mandated responsibilities because of the close relationship between online services, 

broadcasting, and facilities-based MVPDs. In Southwestern Cable, the Supreme Court 

explained that the Commission did not have express authority over cable television 

under the then-existing Communications Act, but the Commission could regulate 

cable television to the extent "reasonably ancillary to the effective performance of 

the Commission's various responsibilities for the regulation of television 

broadcasting."^^ Just as cable television was reasonably ancillary to regulating 

television broadcasting, online video services are reasonably ancillary to regulating 

MVPDs. Therefore, the Commission has the discretion to treat online services that 

offer IVIVPD services as though they were MVPDs even in the event it chooses to read 

the relevant statutes in a way that excludes online services. 

III. The Commission Should Update Its Policy Framework for Online and On 
Demand Video 

A. Section 628 Prohibits Anti-Competitive Actions By an MVPD Against Any 
Video Distributor 

The Commission should use its authority over the video programming 
distribution market to protect online video distribution generally, by prohibiting 
MVPDs from behaving anticompetitively in ways that harm any video distributor, 
whether or not it is an MVPD. Section 628 of the Communications Act provides 
authority for this. This Section bans any actions "the purpose or effect of which is to 

46 47 U.S.C. §§ 151, 152. 

4^ Comcast, 600 F.3d at 646 citing Southwestern Cable Co., 392 U.S. at 178. 

24 



hinder significantly or to prevent any multichannel video programming distributor 
from providing ... programming to subscribers or consumers."^^ The close 
connection between the markets for MVPD and non-MVPD video distribution mean 
that anticompetitive actions taken against an non-MVPD would likely have a 
deleterious effect on the ability of a competitive MVPD to offer programming — for 
example, by increasing its costs, or inhibiting the ability of an MVPD to offer 
programming on demand or online. The Commission and the courts have 
traditionally given Section 628 a "broad and sweeping"^^ reading that gives the 
Commission the authority to protect video competition as necessary. The 
Commission should follow this precedent and find that Section 628 prohibits anti- 
competitive actions by MVPDs against video distributors generally. 

B. The Commission Should Consider the Policy Implications of the Increasing 
Popularity of On Demand Video 

Finally, as more video moves onUne and as on-demand services have become an 
ever-greater part of even traditional MVPDs' offerings, it seems apparent that 
"channel"-oriented video consumption may, in the near future, no longer be the 
dominant way that viewers access some forms of programming. Some kinds of 
"must-see" programming may move solely to on-demand video and thus fall outside 
the Commission's competition rules. While the program access proceeding provides 
a vehicle to address some of these issues that docket is far more complex and deals 
with many other issues. Thus, in a further Notice of Inquiry in this docket, the 
Commission should begin to consider the ways in which its competitive framework 

4847 U.S.C.§ 548. 

49 Cablevision v. FCC, 649 F.3d 695, 704 (D.C. Cir. 2011) (citing Nat. Cable & 
Telecommunications Assoc. v. FCC, 567 F. 3d 659, 664 (D.C. Cir. 2009]). 

25 



is challenged by the rise of on-demand video, and what steps it can take to ensure 

that the video market becomes more competitive. 

CONCLUSION 

For the reasons above, the Commission should find that online services that offer 
multiple channels of video programming fall within the statutory definition of 
"multichannel video programming distributor." 

Respectfully submitted, 

John Bergmayer 
Senior Staff Attorney 
Public Knowledge 

May 14, 2012 



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